restaurant

To say that I have been fortunate to be part of several great restaurant teams would be an understatement. Diversity was a characteristic of all of them. Restaurants are commonly raved about for their food, decor, location, and drinks. What truly sets apart the great from the good is the people. The team that delivers the experience is what the architects of the best restaurants spend the most time focused on.

The more diverse the team, the more likely that future stars, great ideas, and ability to overcome obstacles is present.

Diversity means a new perspective for everything.

Innovation, stability, creativity, and future leaders are born of diverse teams.

I spend a lot of time working on team building, looking for greatness, weeding out bad seeds. All these activities are done in the name of trying to create depth and a pathway for people to advance. When I examined the best teams I have been a part of I noticed that the stars of our organizations today were frequently someone who joined us from a disparate background. They were a source of diversity, and brought a fresh perspective. Now they are a leader, and an integral part of who we are. A restaurant is the product of the people who are working there today, no more, no less.

About half of all the bananas consumed worldwide come from the same tree.

Not the same type of tree. The very same tree. The Cavendish, which has no seeds, is propagated by grafting or cloning. Which means that they’re all identical. If you’re a mass marketer, pushing everyone to expect and like the very same thing, a thing with no variation and little surprise, this is good news indeed.

Until, of course, a fungus comes along and wipes out the entire monoculture.

It’s tempting to want all your bananas to be the same. To have all your employees be clones of one another, your products to be indistinguishable commodities, each conforming to the dominant narrative of the day.

But variation brings resilience and innovation and the chance to make a difference.

What is Diversity?

We typically think about racial diversity as it is a dominant theme in our culture and news these days. But diversity in it’s full sense comes in many forms. For an intellectual, case study based read on the ways that diversity helps an organization; make sure you have read The Medici Effect. For many it is the definitive book on these topics. Frans Johansson, the author, even has some references to the success of diversity in restaurants. Here is his take on diversity:

Cultural diversity does not only imply geographically separated cultures. It can also include ethnic, class, professional, or organizational cultures. The mere fact that an individual is different from most people around him promotes more open and divergent, perhaps even rebellious, thinking in that person. Such a person is more prone to question traditions, rules, and boundaries—and to search for answers where others may not think to. ― Frans Johansson, Medici Effect: What You Can Learn from Elephants and Epidemics

Think about your restaurant, how diverse a group is there, what can you do to increase diversity?

Its a momentary fork in the road, something that jumps up unpredicted, and can catch any of us off guard. That can scare, vex, and distract you, which is precisely why so many react with a negative emotion that is best indicated by a single two letter word. NO.

That’s the temptation which envelops and holds back so many, the magnetism of the ability to say no.

Let’s teach them a lesson. Who do they think they are? Who would want it that way?

Chefs do you recognize this emotion? Who else literally works in front of fire, dealing with randomly placed and unpredictable orders, some of which have at best half-witted requests on them?

Sell Yes.

That’s right, if you can say yes, just say yes. Then turn someone else’s weird taste, relative ignorance about flavors and combinations, or just boring preference into a profit for you and your co-workers.

It is literally just as hard if you say no, in fact, the tension it creates actually makes it worse when you refuse.

Now, I get it, sometimes it comes at the worst most stressful time. Here is what the best Chef’s I know do, they laugh at the absurdity, or post it on the wall with a collection of absurd requests, etc.

We open the door, we don’t control who walks through it.

When we sell yes, we enjoy our lives more, and make someone’s weird cravings go away.

My original Groupon post was written when Groupon turned down billions from Google, and I wrote they would fail or have to adjust their deals. Fail is a strong word and the headline ‘Why Groupon Will Fail’ has served me well in getting people to read then stop and think about the fact that Groupon is bad for small business, especially restaurants. When the horror stories come out in the press the Groupon defender’s response is ‘the business is responsible for doing the numbers and making sure the deal they offer makes sense for them.’ So I decided to look at the numbers and do a comparison.
There is value in being able to reach a large group of people and entice them to buy with a discount. That value has been demonstrated for decades with direct mail companies and it is very well defined.

Here is that value structure: Mail an advertisement in a community direct mail coupon book to 10,000 homes for a fee of $650/dollars, offer $10 off a food purchase around a minimum of $40 (two entrees) and expect two hundred or so coupons to return for an additional cost of goods of approximately $600 ($2000 discount times 30% food cost) this results in a total cost of $1250. That $1250 brings in a minimum of $6000 (200*30) in food plus $2000 in beverage sales (conservative numbers: half the industry average of 40% of sales) for a minimum total of $8000. Bottom Line: Spend $1250 and get back a minimum of $8000. Largest possible loss: $650 if no coupons come in.

Now compare that to Groupon:
Two hundred Groupons that saved a customer $20 ($40 Groupon sold for $20) would bring in $2000 to the restaurant. But with no minimum sale required the restaurant will be liable for providing $8000 worth of food/drink for a mere $2000 in revenue. That $2000 of revenue will cost at least $2400 to produce. Remember a $400 loss requires $2000-$2500 in sales from regularly prices items to break even. Some Groupon bearers will spend little over the value of the offer, but many will spend more.

In this case the total group must spend as much as 31% more than their Groupon value to break even, unlikely that as a whole this happens. So you lose money on 200 Groupons.

Where does it get really bad? They sell thousands.
You could feasibly serve 200 more people over the next two weeks and not have to hire more staff or schedule more hours, but having 2000 Groupons out there you are going to make sure you have plenty of people working. You payroll goes up. You were losing money before, now you are really losing money.

Add that to disgruntled service staff, regular customers that get worse service or displaced, and you have the recipe for a bad year or worse. I believe that competition will likely lead to a better split of the coupon sale price which will help make the equation work better. To some extent this is happening already as the Groupons of the world compete, and take less. Some big questions remain: Are the deals going to get skimpier and cause lower interest among consumers? Are the consumers going to get fed up with the email overload (I know I barely look at them all anymore)? Are the restaurants going to grow tired of the hordes who do not tip well, spend well, and displace full price customers and as a result cheapen their offers and restrict them so much that the customers lose their zeal for them? Will they be worth all the added effort if they result in a small profit? If something is too good to be true like a customer regularly getting 50% off prices meant to be competitive already, a company selling a restaurant’s products for 50% off and only passing on 50% of that, or a company being able to sell its products for 50% off and make money, it is too good to be true and the equation has to adjust.

At GuestFeed we do marketing for restaurants that makes them money, and we consult with them about decisions like whether or not to use Groupon with reasoning like what you just read. Our clients love that kind of straight talk, and we deliver. Can we help you?

Recently I started working with a new client who has not yet decided to use an online reservation system. As I prepared my reasoning for why his restaurant should, I decided to write it here for you.

1) Online Reservations accept your customer’s requests when THEY want to reserve a spot at your restaurant. 24/7 anytime they want. Social media never sleeps and a diner who is surfing early in the morning can click and make a reservation when they see your F page, web page, twitter feed etc… Plus: If their call goes to voicemail at your restaurant it can direct them online for ‘Immediate Confirmation’

2) Information Collection, many restaurateurs can talk until they are blue in the face about getting emails from customers, but employees are resistant. Online reservations basically require that the guests provide an email. With opt in check boxes your email list can bloom. That is money in your pocket.

3) Reminder Tweets & Facebook posts at the ideal times can be distributed to provide direct links to the online reservation page from each social media titan. Remember these are people who like your restaurant enough to follow you on twitter and/or become a friend on Facebook. They are ripe and proven customers who you can reach out to unobtrusively with these posts providing a simple way to make their plans. No hassle = better results.

~ Basically a very good online reservation system is going to cost you approximately $150 a month. That is $37.50 per week, for a tool that makes it easier for your customers to visit you. How many reservations would you have to get per week to justify this expense and add it to your online marketing efforts?

Let me know what you are using, why you are not, or what I can help you figure out about the various services. I am always here to talk, or on twitter @Spirocks.